Kentucky FHA Mortgage Guidelines in Video

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223

Company NMLS ID #1364

click here for directions to our office

Text/call:      502-905-3708

fax:            502-327-9119
email:          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/

 

Kentucky FHA Loan and Repairs- Do you know that appraiser required repairs may be financed into an Kentucky FHA loan?

Do you know that appraiser required repairs may be financed into an KY FHA loan?

Costs of repairs can be added to the sales price before calculating the mortgage amount if:

• The repairs are required by the Appraiser to meet HUD’s MPR;
• The repairs are paid for by the Borrower; and
• The sales contract or addendum identifies the Borrower as the party responsible for payment and
completion of the repairs. Up to the maximum allowable amount. Seller can pay for additional repairs.
The maximum amount of repair costs that may be added to the sales price is the lesser of:

• The amount by which the value of the Property exceeds the sales price;
• The Appraiser’s estimate of repairs; or
• The amount of the contractor’s bid.

See FHA Handbook 4000.1. II.A.2.a https://www.allregs.com/tpl/Main.aspx

Example 1:

$105,000 Value
$100,000 Sales Price
$5,000 Appraiser Required Repairs
$105,000 Max Cost of Acquisition (Value)
X 96.50
$101,325 Base Loan Amount
+ $1,773.19 UFMIP
$103,098 Total Loan Amount
Borrower would pay up to $2,500 in contingency and funds are returned when repairs have been completed
and inspected. (See Escrow Limits below)

Example 2:

$105,000 Value
$100,000 Sales Price
$10,000 Appraiser Required Repairs
$105,000 Max Cost of Acquisition (Value)
X 96.50
$101,325 Base Loan Amount
+ $1,773.19 UFMIP
$103,098 Total Loan Amount

Borrower would pay the $5,000 in repairs that cannot be included into the loan amount. Borrower would also pay up to $5,000 (50% of 10,000 required repairs) in contingency and funds are returned when repairs have been completed and inspected .

The sales price of the property is $100,000 and the appraised value is $105,000. If the appraiser requires repairs in the amount of $10,000, $5,000 can be added to the sales price before calculating the mortgage amount. This is because the value came in at $105,000. The remaining $5,000 required repairs can be paid at closing by buyer or seller.

Escrow Holdbacks: Escrow holdbacks are used to facilitate loan closings for properties that are ready for occupancy but that require minimal completion or repair. The buyer or seller is required to establish a cash  escrow to ensure the completion of the required repairs. The proceeds of the cash escrow are held in an escrow account




Limits: Non HUD REO Transactions

• Existing Construction - Repair Items: Minimum amount to complete the escrow will be 150% (1.5
times) of the estimated cost to complete or cure per appraisal plus final inspection fee. Contingency
cannot be added in the costs of acquisition.

FHA HUD REO Purchases

• $10,000 for FHA HUD REO Purchases (not including 10% contingency) , total escrow amount must not exceed $11,000 including the 10% contingency




Documents Required: Minor Repair Items

• Purchase agreement must indicate who is responsible to provide the funds required for repair escrow. If funds are to be provided by the borrower(s), verification of sufficient funds from acceptable sources is required.
• The appraisal page 2 must indicate "subject to the following repairs or alterations on the basis of a
hypothetical condition that the repairs or alterations have been completed."
• The appraiser/appraisal must provide a list of items that are subject to repair and an estimated cost to cure. If the appraiser indicates the cost of such items cannot be estimated, a licensed/certified
contractor bid is required for estimate of repair costs.
Repairs and Improvements: Repairs and improvements, or any portion paid by the borrower that cannot be financed into the mortgage are part of the borrower's total cash requirements
Source of Funds: If escrow funds are being supplied by the buyer/borrower, source of funds must be verified and must meet eligible source of funds guidelines and requirements for the loan program. AUS must be run with the correct escrow holdback amount established and entered so that asset verification requirements are accurate

​

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

American Mortgage Solutions, Inc.

10602 Timberwood Circle, Suite 3

Louisville, KY 40223

 phone: text or call (502) 905-3708

 Fax:     (502) 327-9119

kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

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Good Neighbor Next Door Program offered thru HUD officer next door program in Louisville Kentucky HUD Homes for $100 Down

The Good Neighbor Next Door Program offers HUD owned single family (one-unit) homes to eligible participants at a 50% discount. Law enforcement officers, teachers, firefighters and other emergency medical technicians who meet all other requirements of the program are all eligible to participate in this program.
Program Summary	•	Borrower is a full-time law enforcement officer, teacher or firefighter/emergency medical technician
	•	A 50 percent discount from the list price is provided in the form of a forgivable second lien
	•	The second mortgage is a mortgage and note payable to and provided by HUD in the amount of the difference between the list price of the home and discounted selling price
		- The term of the note is 36 months from the date of owner-occupancy - Refinance restrictions may apply
	•	One-unit residential properties
	•	Borrower cannot own any other residential property within 12 months of the offer date
	•	None of the borrowers could have ever utilized this program in the past
	•	The following must be detailed on the purchase contract with HUD
		- 50% discount - $100.00 downpayment required - Borrower may finance closing costs Qualifications 1. You must be able to qualify for an FHA mortgage.  If you don’t have a letter of prequalification and would prefer to check your credit score first yourself, you can get a free credit report by following the link that’s found on the Federal Trade Commission’s website. 2. You or your spouse cannot have owned a home in the previous year. Your name can’t be on a deed in the United States. 3. You must meet the occupational requirements below: Good Neighbor Next Door Qualifications Teachers, Counselors, and Administrators State certified to teach any grades pre-K through 12 Teach in a private school in the area where the home is located Teach in the public school district where the home is located You or your spouse have not had your name on a real estate deed for the past 12 months You can get a letter of mortgage prequalification or proof of funds before the submitting an intent to purchase You can provide a refundable earnest money check for 1% of the home’s listed price. It needs to been in the form of a cashier’s check or money order made out to the U.S. Department of HUD. You intend to teach for at least one more year Firefighter/Emergency Medical TechniciansYou may participate in the Good Neighbor Next Door program as a Firefighter/Emergency Medical Technician if you are employed full-time as a firefighter or emergency medical technician by a fire department or emergency medical services responder unit of the federal government, a state, unit of general local government, or an Indian tribal government serving the area where the home is located. You or your spouse have not had your name on a real estate deed for the past 12 months You can get a letter of mortgage prequalification or proof of funds before the submitting an intent to purchase You can provide a refundable earnest money check for 1% of the home’s listed price. It needs to been in the form of a cashier’s check or money order made out to the U.S. Department of HUD. Law EnforcementYou may participate in the Good Neighbor Next Door program as a law enforcement officer if you are employed full-time by a law enforcement agency of the federal government, a state, a unit of general local government, or an Indian tribal government; and, in carrying out such full-time employment, you are sworn to uphold, and make arrests for violations of, federal, state, tribal, county, township, or municipal laws. You or your spouse have not had your name on a real estate deed for the past 12 months You can get a letter of mortgage prequalification or proof of funds before the submitting an intent to purchase You can provide a refundable earnest money check for 1% of the home’s listed price. It needs to been in the form of a cashier’s check or money order made out to the U.S. Department of HUD. Is the Good Neighbor Next Door a legitimate program? Yes, this a United States Department of Housing and Urban Development program that has been created for the benefit of civil servants when purchasing a designated HUD home. If you want verification you can visit HUD’s website. The program has been created for teachers, firefighters, police officers, and EMT’s. What does it mean that these houses are 50% off? HUD has their homes appraised based on their current condition. The homes are discounted from this appraised price.   What is a HUD home? HUD acquires properties from insured lenders who have foreclosed FHA loans. Are HUD homes bad homes? Just because it’s a HUD home doesn’t mean it’s a bad home. The only reason it’s a HUD homes is because it has gone through foreclosure. Do all HUD homes qualify for the Good Neighbor Next Door program? No. Only the homes that are designated by HUD are eligible. How often do Good Neighbor Next Door homes become available? Every day homes are listed some where in the country. Sign-up on the notification list so that you will be notified when a home becomes available in your community. How long do these homes stay on the market? These homes are only listed for a seven day period. If they don’t sell through the Good Neighbor Next Door program then they will go to the general HUD list at full list price. Do I have to live in the Good Neighbor Next Door home that I purchase for a certain length of time? To receive the full 50% discount you agree to live in the home for three years. What if I move out of the house before three years? You will still receive a discount, but it will be prorated according to how long you live in the house. If I own the house, how can HUD enforce how long I own the home? HUD will require that you sign a silent second mortgage in the amount of the discount. There is no monthly payment or interest on the second mortgage. HUD uses the second to track your homeownership. If you sell your home before the three-year anniversary date then a prorated portion of the second mortgage will be due at closing. This second mortgage will automatically drop off after three years. My name has been on a deed in the past year, do I still qualify? No, neither your name nor your spouse’s name can have been listed on any real estate deed in the United States in the past year. Are there any other benefits associated with the Good Neighbor Next Door program? Yes. If you get an FHA loan HUD will allow you to finance in all of your closing costs, move-in for only a $100 down payment, and finance certain home repairs. How do I submit a bid? You can enter on this website. A qualified broker will call you and give you access to the home, assist you with locating a lender, and monitor inspections & the closing process. We will work with that broker to make sure the closing process goes smoothly. Who pays the real estate broker? For the Good Neighbor Next Door program, HUD requires that the buyer pay the real estate commission. If you get an FHA loan HUD will allow you to roll the commission into your mortgage. On each property that’s listed on this website there is an approximate mortgage payment. This payment includes the financed commission. Can I bid higher or lower than the list price? No. In this program HUD will only allow you to submit “an intent to purchase” for full list price. This list price will be discounted by 50% at closing. Everyone who bids will have identical bids. If there is more than one person bidding on a home, how does HUD determine who wins the house? A computer will randomly decide who wins. Can you bid on more than one home? You can purchase only one home, but to increase your chances of winning one of the houses you can submit bids on different houses. HUD limits people to only one Good Neighbor Next Door home in their lifetime. How much earnest money is required? HUD requires that you give your broker a cashier’s check or money order for 1% of the home’s list price. On a $100,000 home your earnest money will be $1,000. HUD has a minimum earnest money requirement of $500 and a maximum $2,000. I thought the down payment was only $100, what’s this 1% of list price? The 1% earnest money is refundable at closing or if you are not selected as the winner of a home. If you are selected as the winner of a Good Neighbor Next Door home and if you want to finance in all of your closing costs with only a $100 down payment, then you could receive back a check at closing. This check will be your earnest money minus the $100 down payment.   What if there are significant repairs required on a home and I don’t have the cash to fix it? You are able to get a specific type of FHA loan (203K) that will allow you to finance up to $35,000 worth of home repairs into your mortgage. Can I use a Good Neighbor Next Door homes as an investment? Yes, but only if you occupy the home and don’t own any other real estate. After three years you can sell the home, realize any increases in value, and pay off the discounted mortgage that you have. Since this is your principal residence you can claim a capital gains exemption and not be taxed on gains. Consult your CPA for details. What if my employment changes before the three years is up? After you close your discount will not be in jeopardy. What do I do next? What is the process?  1. Fill out the ”Entry Form” and we will contact you.  Everyone is required to have a letter of prequalification or proof of funds before submitting an “intent to purchase.” You may use any lender that offers FHA financing. If you would like us to help you through the process fill out this questionnaire and we will have a lender get in contact with you. Often, people can get a letter of prequalification within hours of contacting one of the lenders we recommend. 2. View the home. If you don’t have time to view the home you may still have the opportunity to submit your name in the lottery and if selected inspect the home then. 3. Get either a cashier’s check or money order for 1% of the home’s listed price. 4. Decide on one or more homes to submit your intent to purchase.
	Joel Lobb (NMLS#57916) Senior  Loan Officer 502-905-3708 cell KKentucky HUD Homes for $100 Down
To search for available HUD homes for sale, please click here To find out more about the Good Neighbor Next Door program, please click here.

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Get a HUD Home for $100 Down

Kentucky HUD Homes for $100 Down 

If you can handle those qualifiers, here's the deal:

• You can only buy HUD homes. Go to the HUD Homes For Sale web page.

• You must use a HUD-registered real estate broker or agent.

• You must qualify for and use Federal Housing Administration (FHA) financing.

• You must plan to be an "owner-occupant," buying the property to live in and not as an investment.

• The home's purchase price must be no more than the appraised value of the property. If you bid a higher price you can pay the difference in cash, minus $100.

• The $100 down incentive must be on the executed contract. That means you have to specifically request the incentive. Your real estate agent should be aware of this provision.

• In some cases, HUD will also cover up to 3 percent of the closing costs.

• The $100 down payment program is eligible for the FHA 203(k) loans. The loans allow borrowers to use a portion of their purchase loan to repair and renovate run-down homes.

That's a good thing because HUD homes are sold in an "as-is" condition -- what you see is pretty much what you get. You could find a diamond in the rough or fool's gold. HUD homes often include a property condition report, but that is not a warranty.

The property report can resemble a home inspection report, but HUD home buyers are always encouraged to get a home inspection to determine just what "as is" is.

The Good Neighbor Next Door Sales Program

The Good Neighbor Next Door Sales Program

The Good Neighbor Next Door Sales Program was established December 1, 2006. This program as many others are revised and/or clarified periodically by a HUD mortgagee letter. Mortgagee Letter 2013 – 20, dated June 12, 2013 was issued to further clarify the program.

This program enables eligible program participants to purchase, at a 50 percent discount from the list price, a specially designated HUD acquired single unit home that is located in a HUD designated Revitalization Area. In return, the eligible purchaser must:

• Own and live in the home as his/her sole residence for a term of 36 months, and

• Execute a note and second mortgage on the home, payable to HUD, for the difference between the list price and the discounted sales price.

To qualify to purchase a home through the GNND Sales Program, a potential purchaser must live and work in the community the property is located in and be employed as a:

• Law Enforcement Officer;
• Pre – kindergarten through 12th Teacher; or
• Firefighter/Emergency Medical Technician.

The eligible purchasers may search for properties available under the GNND program at: http://hudhomestore.com/HudHome//Index.aspx.

MIP for the GNND program is only on the first mortgage note and mortgage. The MIP is not on the required second note and mortgage.

The required thirty – six month owner – occupancy term shall commence either thirty (30), ninety (90) or one hundred eighty days (180) days following closing depending on the amount of required home repairs. HUD may allow interruption to the occupancy term when necessary to prevent hardship, but only if the borrower submits a written and signed request to HUD.

If by chance a property is listed for $25,000.00 or less the eligible participants can acquire the home for as little as $100.00. If the property is listed for more than $25,000.00 then eligible participants can acquire the property at a fifty percent discount.

This is an attempt by HUD to stabilize communities all over the United States by putting good income borrowers in areas in need of revitalization.

Apply for a home loan by clicking the link below:It's free and takes less than 5 minutes Or call us at 502-905-3708 for your free application over the phone